1. Ohio Wesleyan University Goran Skosples
17a. Transition in Practice

3. The end of the Soviet Union
Gorbachev’s ___________ (restructuring) aimed at reforming the central planning system and not replacing it with the market system
Boris Yeltsin was supporting a rapid shift toward a market system
___________: Transition to Market
replacement of the centrally planned system with private property and liberalized market prices
1991: the SU broke apart  Commonwealth of Independent States (CIS)

4. Gaidar reforms (shock therapy)
The five pillars:
Rehabilitation of the Ruble
Market liberalization
decontrolling prices (except energy), free entry into all economic activity, reforming the legal system
Privatization
Constructing social security net
Converting the defense sector 18

5. Institutional Reforms in Russia
Privatization (mass privatization)
management led
voucher privatization (Anatoly Chubais)
privatization for cash (from 1995)
financial-industrial groups (FIGs) – bank-led
the tax system
needed to be started from scratch too complex
financial sector
a large number of private small banks
many banks failed in 1998 (financial crisis)
securities market not well developed 19

6. Evaluation rampant corruption (kleptocracy)
worsened income distribution
heavily reliant on natural resources (exports)
high oil prices helped Russia pay off its debt to foreign creditors
issues with concentration of political power
President Vladimir Putin abolished the election process for regional governors  nomination
curtailed power of the oligarchs to a degree
regional issues with Chechnya 19